Lien, Levy, and Garnishment Appeals

If the Internal Revenue Service has
placed any liens or levies on a taxpayer’s property or has garnished the wages
of a taxpayer, there is an appeals process that can have those potentially
devastating terms revoked. A lien is defined as a form of security interest
over a piece of property to guarantee the payment of a debt or taxes owed to
the IRS. The IRS can place a lien on a taxpayer’s motor vehicle, their home, or
another piece of property they own. This is where levy comes into play. A levy
is the actually seizure of the property or wages of a taxpayer to settle a debt
with the IRS. A garnishment is when the IRS will have the employer of a
taxpayer remove a large portion of the taxpayer’s paycheck to pay off the debt.
Having one’s wages garnished can be potentially devastating, since the
remainder of the paycheck will be too little to live on each week. The
percentage of money removed from the paycheck can be anywhere from 30 to 70
percent.

A lien, a levy, or a garnishment can be
appealed with the IRS and with the help of a tax attorney. The taxpayer that
has had a lien, levy, or garnishment placed on their property or wages can
request a Collection Due Process hearing with the Office of Appeals.

Before the
taxpayer can request the hearing the grounds for appealing must meet the
following criteria:

The
taxpayer has paid all of the taxes owed prior to receiving the notice of levy

The
IRS assessed the tax and actually sent the notice while the taxpayer was in
bankruptcy

The
IRS committed a procedural error in their assessment

The
Statute of Limitations expired before the IRS sent the notice of levy

The
taxpayer was not given the proper opportunity to dispute the liability

The
taxpayer requests the opportunity to discuss various collection options

The
taxpayer wishes to make a spousal defense

A spousal defense is defined as the
ability to prove that the taxpayer is innocent regarding the tax problems that
the IRS is contacting them about. The taxpayer’s spouse could have filed a tax
return incorrectly or the taxpayer’s ex-spouse could have done the same.

To
qualify as an innocent spouse when filing an appeal for a lien, levy, or a wage
garnishment one must meet one or more of the following criteria:

The
taxpayer filed a joint return with an understatement of tax due because of the
spouse

The
taxpayer had no reason to know that the return was filed with an understatement
when the spouse signed the return

The
taxpayer would be treated unfairly by being held liable for the understated tax

The
taxpayer and his or her spouse are not attempting to transfer property between
each other as part of a fraudulent scheme

The
taxpayer must request innocent spouse relief within two years after the IRS
began their collection against the taxpayer for the unpaid taxes

Once the appeal hearing is complete, the
IRS will send a letter of determination to the taxpayer that appealed the
decision of a lien, levy, or garnishment. The letter of determination will
inform the taxpayer of the decision made by the IRS regarding the appeal.
Within 30 days of receiving the letter of determination, the taxpayer can bring
a suit to contest the decision. The IRS will stop levying wages or property
when the levy is released, if the taxpayer pays the debt, or if the time
expires for legally collecting the debt of the tax.